The Australian Industry Group (AIG) has released its Performance of Services Index (PSI) for September, which registered a large 4.0 point fall to 45.4 points – the seventh consecutive month of contraction for the services sector (index readings below 50 points indicate a contraction in activity, with the distance from 50 indicative of the strength of the contraction).
With the exception of employment (up 4.0 points to 52.1), all activity sub-indexes were below 50 points in September, with both the sales (down 9.9 points to 41.5) and new orders (down 8.4 points to 44.0) sub-indexes falling sharply after improved results in August.
According to AIG Chief Executive, Innes Willox:
“The drop in the Australian PSI® in September calls into question the momentum that had been gathering over the previous couple of months. The sharp falls in sales and new orders underlines the fragility of the economy in search of sources of growth beyond the minerals and energy sector…
With commodity prices falling and global markets displaying greater volatility, it has become more important that we develop new areas of strength in the domestic economy,” Mr Willox said.”
There were a few bright spots, however. Along with the rise in the employment activity sub-index, the retail sub-index entered into positive territory for the first time in over three years, and other household-facing sub-sectors, such as hospitality and personal & recreational services, also expanded.
